Most of us reach a point as we age that we start to think about who we want to care for us when we no longer can care for ourselves. For many, this may mean entering a nursing home when the time comes. However, it is no secret that nursing home care can be prohibitively expensive. It is tempting to simply spend down your assets in order to qualify for Medicaid in order to pay for nursing home care. However, doing so can backfire due to the Medicaid Look Back Period.
What is the Medicaid look back period?
The Medicaid look back period is a time period in which any financial transactions made will be reviewed by the government. The government identify transactions in which assets were given away, transferred or sold for less than their fair market value, starting from the day a person applies for Medicaid and going back five years. Any violations will result in a person being ineligible for Medicaid for a certain amount of time. This can present difficulties for those who urgently need nursing home care.
Irrevocable trusts
In general, an irrevocable trust is not counted as an asset for Medicaid eligibility. However, the trust must have been established within the past five years. If not, for Medicaid purposes, these trusts are considered gifts and will be subject to the Medicaid Look Back Period.
Learn more about asset protection
Irrevocable trusts are just one part of Medicaid planning. There are other tactics that you may be able to use to avoid the Medicaid Look Back Period and protect your assets. This post is for educational purposes only and does not contain legal advice. Our firm’s webpage on asset protection may be of interest to those who want to learn more about this topic.
